The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of those who acquired CareDx, Inc. (“CareDx”) (NASDAQ: CDNA) securities from February 24, 2021 through May 5, 2022, both dates inclusive (the “Class Period”). Investors have until July 22, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
CareDx is a diagnostics company that provides services and products to the organ transplant recipient community, offering diagnostic testing services, products, and digital healthcare software for transplant patients and care providers.
On October 28, 2021, after the market closed, CareDx revealed that it had received a civil investigative demand from the U.S. Department of Justice as part of an investigation into the Company’s “business practices related to [its] kidney testing and phlebotomy services.” The Company had also received a subpoena from the U.S. Securities and Exchange Commission (“SEC”) for similar issues as well as certain accounting and public reporting practices. On this news, the price of CareDx shares declined by $19.34 per share, or approximately 27%, from $70.34 per share to close at $51.00 per share on October 29, 2021.
Then, on April 15, 2022, the Company’s former Head of Community Nephrology filed a complaint that provided detail regarding CareDx’s misconduct, including the use of its home-based blood-drawing service, RemoTraC to improperly bundle the Company’s most expensive testing services with other blood tests, that led to the government investigations, as well as the Company’s knowledge of the misconduct and its attempts to conceal it. On this news, the price of CareDx shares declined by $2.89, or approximately 8.1%, from $35.41 per share to close at $32.55 on April 18, 2022.
Then, on May 5, 2022, after the market closed, the Company released its financial results for the first quarter of 2022, reporting that testing service revenue fell short of analysts’ expectations with an average price decline of 4.9%. On this news, the price of CareDx shares declined by $5.88 per share, or approximately 18.6%, from $31.66 per share to close at $25.78 on May 6, 2022.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Defendants had engaged in a variety of improper and illegal schemes to inflate testing services revenue and demand, including pushing a surveillance protocol through inaccurate marketing materials, offering extravagant inducements or kickbacks to physicians and other providers, and improperly bundling expensive testing services with other blood tests as part of the RemoTraC service; (2) these practices, and others, subjected CareDx to an undisclosed risk of regulatory scrutiny; (3) these practices rendered the Company’s testing services revenue reported throughout the Class Period artificially inflated; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.